Pentagon Adds Tencent, CATL To Military Blacklist

The US Department of Defense has added several high-profile Chinese tech companies including Tencent Holdings and electric vehicle battery maker CATL to a list it says directly aid China’s military, in a blow to the firms’ reputations.

While addition to the list does not entail any immediate sanctions, it serves as a warning to US organisations and entities of the risks of conducting business with the companies.

The move could also place pressure on the US Treasury to introduce sanctions.

Other major firms added to the list include chip maker Changxin Memory Technologies (CXMT), a key start-up in China’s efforts to become less reliant on semiconductor imports, as well as Quectel Wireless and drone maker Autel Robotics.

Military list

The so-called Section 1260H list, which must be updated each year under US law, designated a total of 134 companies, according to a notice in the Federal Register.

Tencent is best known as one of the world’s biggest gaming companies, and also operates the social media platform WeChat.

The company’s shares dropped 7 percent in Hong Kong trading on Monday following the announcement, falling by a similar proportion in US trading.

The company said in a statement that its addition to the list was “clearly a mistake”.

“We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business,” Tencent stated.

‘Mistake’

CATL, the world’s biggest manufacturer of EV batteries, similarly said the listing was a mistake and that it “is not engaged in any military related activities”.

Quectel said it “does not work with the military in any country and will ask the Pentagon to reconsider its designation, which clearly has been made in error”.

The Defense Department also removed six companies it said no longer meet the requirements for the designation, including AI firm Beijing Megvii Technology, China Railway Construction Corp, China State Construction Group and China Telecommunications Corp.